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ADB Loan to Help Small-Scale Farmers in the Philippines

Nearly 30,000 rural households - including landless workers and small-scale cultivators - in the Philippines should have their living standards raised by a US$93.2 million loan approved today by the Asian Development Bank.

The Agrarian Reform Communities Project will help 140 of the nearly 1,000 poverty-stricken communities all over the country which have been identified by the Government. Agrarian reform communities are in areas where land has been distributed under a land reform program but are unable to reap the full benefit of the land as they still lack basic infrastructure and support services. Typically, each agrarian community consists of a few villages with populations ranging from several hundred to a few thousand.

The project will provide these communities with roads, bridges, communal irrigation, drinking water supply and other basic infrastructure. It will also survey 100,000 hectares of public lands, an important step needed for the issuance of land titles to farmers.

In 1997, 45 percent of rural households in the Philippines lived below the poverty line and this situation has undoubtedly worsened with the economic downturn and the El Nino-induced drought.

The project complements the Government's Comprehensive Agrarian Reform Program which distributed public and private lands to farmers by providing the necessary basic infrastructure and support services.

Importantly, the project not only supports the government's unique strategy of targeting agrarian reform communities but also encourages comprehensive bottom-up community participation. It will provide technical, social, and economic support services to farmers, credit through the Land Bank of the Philippines and assistance to local government units including training programs.

The total project cost is US$168.9 million. Aside from the ADB, financing will come from the Department of Agrarian Reform (US$26.9 million), which is the executing agency, the Land Bank of the Philippines (US$30.4 million) and local government units (US$18.4 million). The ADB loan will come from the Bank's ordinary capital resources. The interest rate will be determined in accordance with the Bank's pool-based variable lending rate system for US dollar loans. The loan is repayable over 25 years, including a grace period of six years.

The project is expected to be completed by 31 July 2005.

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